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MIAMI – May 9, 2012 – Bank of America is sending out letters to potentially thousands of struggling Florida homeowners to let them know they may be eligible for a reduction in their loan balance that may save them up to 30 percent in monthly payments, the lender announced Tuesday.

The letters will go out to more than 200,000 mortgage holders nationwide, with the first to arrive this week, the bank said. However, most of the letters will be mailed by the third quarter that starts July 1.

The latest loan modification offer is part of a $25 billion settlement involving Bank of America, four other major banks, 49 state attorneys general and federal officials.

Bank of America officials said they had no immediate number of how many South Florida mortgage holders would be sent the letters. “What I can tell you is that the heaviest concentration is in California and Florida, the largest of the hardest hit states,” said Jumana Bauwens, a spokeswoman for Bank of America Home Loans.

About 19,000 South Florida homeowners with Bank of America mortgages were at least 60 days late, Jessica Garcia, vice president for the bank’s national mortgage outreach, said last month.

To be eligible for the new loan modification, the Florida homeowners must have been at least 60 days behind on their payments on Jan. 31, 2012. They also must owe more on the mortgage than their home is worth today.

Their monthly payment – principal, interest, property taxes, insurance and any homeowner association fees – also has to total more than 25 percent of the family’s gross household income. “A key goal of mortgage modifications is to provide an affordable monthly payment, based on borrower’s ability to pay,” according to a Bank of America statement released Tuesday.

And to be eligible for the latest loan modification offer, homeowners should have loans owned and serviced by Bank of America – or serviced for another investor that has given the bank the authority to make the modifications.

Bank of America began reducing the principal on some home loans in March, first granting the reductions to homeowners already in a modification review process.

“So far under this early initiative, about 5,000 trial modification offers have been mailed, providing a potential total of more than $700 million in forgiven principal,” Bank of America officials said in a release.

The homeowners are required to make at least three payments on time before the modification can become permanent, the bank said.

“To the extent principal reduction and other modification tools help us turn mortgages headed for possible foreclosure into long-term performing loans, it will be positive for homeowners, mortgage investors and communities,” said Ron Sturzenegger, a Bank of America Legacy Asset Servicing executive.

In South Florida, Bank of America has seen a declining number of delinquent mortgages – from about 30,000 last June to 19,000 now. That mirrors a national downward trend, according to a recent U.S. Department of Housing and Urban Development report.

For more information, customers may call Bank of America at 877-488-7814.

FORT LAUDERDALE, Fla. – May 3, 2012 – Thousands of vacant properties in South Florida’s hard-hit housing market have deteriorated into eyesores that violate health and safety laws, depress property values and spread blight. The owners of these homes: some of the world’s biggest banks.

In an extensive investigation of foreclosed homes, the Sun Sentinel found more than 10,300 property code violations lodged against banks in 10 South Florida cities since 2007.

Municipalities cited the banks because they had title to the homes. But some banks deny responsibility for neglected houses for reasons that ordinary homeowners could not, the Sun Sentinel found.

Banks shift the blame, saying maintenance isn’t their job but the responsibility of another bank or company, known as a “loan servicer.” And they delay or evade accountability simply because they are large institutions, usually based in other states, even other countries.

The Sun Sentinel, in its investigation, identified banks as owners only in cases in which they held title to the property. But the newspaper also found that years after launching foreclosure suits, some banks or their agents balk at completing the process and taking title to homes that are unlikely to sell for much. That practice fuels a separate legal “limbo” problem that traps thousands of vacated homes in years-long court cases, often as they tumble into ruin.

Banks pay little price for letting neighborhoods rot.

In South Florida, property code violations are civil matters, dealt with mostly by fines, which when left uncorrected can compound daily and grow to be ludicrously steep – as much as $4.7 million, for example, on a rundown Fort Lauderdale house owned by Germany’s Deutsche Bank.

Ultimately, banks negotiate with local officials to dramatically cut the fines so as not to hinder a home’s sale.

The results of these practices are on stark display on street after street, where vacant properties sit decaying and forlorn.

They are eyesores. Many have been looted. Some have caught fire. They attract vagrants and vandals, lead to increased crime and can depress the value of nearby homes, particularly if there is an abundance of them in a neighborhood.

Some vacant homes pose extreme danger.

In Miramar, Fla., in October 2009, a common worry of parents came true. While his family was busy unpacking boxes and moving into the house next door, a toddler wandered into the backyard of an unoccupied, bank-owned house and drowned in the pool.

The boy’s mother, Margarette Francis, told investigators the water was so dark and thick with “garbage” it was unrecognizable as a place to swim.

“It was, oh, disgusting and I don’t think the baby knew there was a pool,” she said. “The only thing I can tell you is the slide attracted him. … He probably thought he was walking into a playground and he walked right into the … water.”

The family has filed a wrongful death lawsuit in Miami against U.S. Bank, which had title to the house, and 16 other corporate entities that had some contractual relationship or responsibility for the home after foreclosure. A spokeswoman for U.S. Bank declined comment.

In a report released earlier this month, the National Fair Housing Alliance, a Washington advocacy group, charged that banks are violating the federal Fair Housing Act by neglecting the upkeep on homes in minority neighborhoods and steering real estate agents to the banks’ better-preserved homes elsewhere.

The organization has called on federal regulators and law enforcement to investigate the banks for housing discrimination practices.

Wells Fargo, one of the banks identified, denied the allegations. The bank “conducts all lending-related activities in a fair and consistent manner without regard to race; this includes maintenance and marketing standards for all foreclosed properties for which we are responsible,” said company spokeswoman Vickee Adams.

Since the real estate crash six years ago, dozens of South Florida municipalities have passed laws requiring that homes in foreclosure be registered by lenders or their agents once they become vacant. That has helped foster communication with the banks and led to quicker responses to local concerns.

“I’d say most banks want to do the right thing,” said Brian McKelligett, Fort Lauderdale code enforcement supervisor.

But banks can be bad neighbors. In the cities surveyed by the Sun Sentinel, four of 10 bank-owned properties on average were cited for violating municipal health, safety or appearance codes in 2011.

MARGATE, Fla. – May 3, 2012 – More home sellers in recent years have considered the role of landlord as they wait for a stronger market to sell or simply because they see a potential profit in renting. But for condo owners, renting out their homes isn’t always easy.

More condo associations have instituted stricter caps to prevent too many homeowners from renting out their place. While rental caps have been in place for years at many buildings, stricter caps – which could permit, say, only 20 percent of the units to be rented out at a time – mean that some homeowners must wait a long time before they can rent out their unit. These homeowners argue that the rental caps force them to sell at a loss, stay put or even fall into foreclosure.

Real estate agents say the stricter rental caps potentially hurt home sales too. Potential condo buyers may eye those rental caps as a negative, particularly young professionals who say that if a job relocation offer comes along, they’d be stuck selling at a low price and wouldn’t have the option to rent.

Condo associations say the rules are in place to help homeowners, not hurt them. Several argue that homeowners tend to take better care of their homes than renters. They also point to lenders that want the number of rentals kept relatively low. For purchasers getting a Federal Housing Administration (FHA) mortgage, a building’s owner occupancy has to be equal or greater than 50 percent. Conventional loans also often have owner-occupancy requirements for mortgages on condo developments.

Tightening the rental caps may “push more people onto the foreclosure path,” Donna D. Berger with Katzman, Garfinkel & Berger in Margate, Fla., told The Wall Street Journal. On the other hand, loosening rental caps can “jeopardize owners’ ability to have purchasers qualify for a federally backed mortgage.”

Banks that made reckless home loans in south Florida have been tiptoeing away from foreclosures in a tactic designed to cut their losses. The result: Orphaned, dilapidated homes dot the landscape from Kendall to Lake Worth. There are no owners willing to claim and care for them. A months-long Sun Sentinel investigation of property code violations involving abandoned homes uncovered case after case in which banks launched foreclosure lawsuits but then stalled or avoided taking ownership. In effect, the banks legally sidestepped responsibility for the empty homes, causing great harm to neighborhoods. The real estate industry calls such properties “bank walkaways.” They are no longer maintained by their legal owners, whether they were investors bailing out of unwise deals or families in financial ruin who decamped. Nor are they being tended to by lenders, which have halted foreclosure proceedings because the remaining equity in the properties is deemed inadequate to cover the banks’ costs to reclaim title and maintain, refurbish and sell them. The practice has contributed to South Florida’s foreclosure “limbo” problem in which thousands of vacant homes are stuck in unsettled court proceedings for years.